On 14 February 2024, the Council of the EU published two final compromise texts representing the outcome of a key stage of work on the new EU legislative package on anti-money laundering and countering the financing of terrorism (hereinafter: “AML/CFT“). The new sources of law proposed by the EU institutions will mostly replace existing national legislation, unifying the European legal order and enhancing the resilience to the risks of money laundering and terrorist financing (hereafter: “AML/CFT“).
What does the new AML/CFT package cover?
The new AML/CFT package consists primarily of proposals for:
- Regulation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (hereinafter: “AMLR“) – link to final compromise text;
- Directive on the mechanisms that Member States should put in place to prevent the use of the financial system for the purpose of money laundering or terrorist financing (hereinafter: “AMLD6“) – link to final compromise text.
In addition to this, the new AML/CFT package also includes a proposal for a regulation establishing the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (hereinafter: “AMLAR“) and a information accompanying transfers of funds and certain crypto-assets (hereinafter: “TFR“). However, the compromise text of AMLAR has not yet been published, while the TFR has already entered into force and will start its application on 30 December 2024.
What will the new regulations bring?
The essence of AMLR is that it will be directly applicable in all EU Member States and will replace existing national laws implementing the provisions of the 4th and 5th AML Directives, including the Polish AML Act of March 1, 2018. This means that obliged institutions will have to comply with the same rules regardless of which EU country they operate in, which will significantly facilitate cross-border operations and avoid regulatory risks associated with different interpretations of European law requirements applied by national supervisory authorities. Issues requiring implementation, on the other hand, will be retained and developed in AMLD6.
The EU institutions, in proposing the adoption of the AMLR, also seek to improve and tighten the existing regulation by, inter alia, expanding the list of obliged institutions. It is worth noting that traders of luxury goods such as jewellery, watches, cars, aircrafts and watercrafts above a certain value will become new obliged institutions. In addition to this, a novelty will be the imposition of full AML/CFT obligations on crowdfunding platform providers, consumer credit and mortgage intermediaries and professional football clubs and agents.
However, there are many more novelties. In the AMLR, they include, among other things, the introduction of a maximum limit for cash payments of €10,000. There are also modifications to the provisions regarding the outsourcing of AML/CFT processes, the identification of beneficial owners or the application of enhanced due diligence measures. AMLD6, on the other hand, brings changes regarding the verification of information provided to beneficial owner registers, access to these registers and the activities of financial intelligence units.
When will the new package start to apply?
AMLR and AMLD6 will now be voted on by the Parliament and the EU Council (final approval), after which they will be published in the Official Journal of the EU. The AMLR and AMLD6 will enter into force on the twentieth day following that of their publication, and the application of most of the provisions (in the case of AMLD6 understood as the deadline for implementation) will begin three years after the date of entry into force.
Who are we?
Raczynski, Skalski & Partners Law Firm specializes in advisory services related to applicable anti-money laundering and counter-terrorist financing regulations. Our lawyers provide clients with comprehensive advice related, in particular, to the preparation of ML/TF risk management procedures, assistance in drafting and updating internal risk assessments and fulfilling reporting obligations to supervisory authorities. We provide services to all types of obligated institutions, including, in particular, entities operating in the financial market, such as payment institutions, lending institutions, real estate agents, crypto-assets services providers and currencies exchange offices.
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